TaxTMI 
TaxTMI 
2014 (2) TMI 1172
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....s directly hit by the proviso to section 2(15) of the Act which was inserted with effect from the assessment year 2009-10. 2.2 While doing so, the learned Director of Income-tax erred in : (a) holding that the appellant has become non-genuine and the registration allowed under section 12A of the Act be cancelled/ withdrawn ; (b) coming to the conclusion that the appellant-trust loses its charitable character and there is change in the status of the appellant. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such cancellation/withdrawal was called for." 3. From the above grounds it is gathered that the grievance of the assessee relates to the cancellation of registration already granted under section 12A of the Income-tax Act, 1961 (hereafter referred to as "Act"). 4. The facts of the case in brief are that the Director of Income-tax (Exemption) ("DIT(E)" for short) received a proposal from the Income-tax Officer (Exemption) ("ITO(E)" for short) for cancellation of registration granted to the assessee on the ground that the assessee was carrying on the activities in the nature of trade, commerce or business, etc. and gross receipts theref....
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....ipts as part of its earnings under the ambit of aforesaid proviso. He further observed that the income received by the assessee was towards commercial exploitation of its property in a systematic manner which was nothing but a business income. Reliance was placed on the decision of the hon'ble Calcutta High Court in the case of CIT v. Shambhu Investment P. Ltd. [2001] 249 ITR 47 (Cal) which was affirmed by the hon'ble Supreme Court in the case of Shambhu Investment P. Ltd. v. CIT [2003] 263 ITR 143 (SC). 6. The Director of Income-tax (Exemption) was of the view that the assessee-trust was directly hit by the provisions of section 2(15) which had been introduced from the assessment year 2009-10 and once a charitable trust/ institution was hit by the aforesaid proviso, then there was deeming provision that such entity shall not be for charitable purposes and the provisions of section 12AA(3) of the Act get attracted. Accordingly the registration allowed in the earlier years under section 12AA of the Act was cancelled. Now the assessee is in appeal. 7. Learned Counsel for the assessee contended that the objects of the assessee-trust are charitable in nature which is clear fr....
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....) previously provided that if the activities of the trust or institution are found to be non-genuine or its activities are not in accordance with the objects for which such trust or institution was established, the registration granted under section 12AA can be can celled by the Commissioner after providing the trust or institution an opportunity of being heard. 7.2 The power of cancellation of registration is inherent and flows from the authority of granting registration. However, judicial rulings in some cases have held that the Commissioner does not have the power to cancel the registration which was obtained earlier by any trust or institution under the provisions of section 12A as it is not specifically mentioned in section 12AA. 7.3 Therefore, section 12AA has been amended to provide that the Commissioner can also cancel the registration obtained under section 12A as it stood before amendment by the Finance (No. 2) Act, 1996. 7.4 Applicability.-This amendment has been made applicable with effect from 1st June, 2010 and shall accordingly apply for the assessment year 2011-12 and subsequent assessment years." 9. Further, the Income-tax Appellate Tribunal, Agra Bench in the ....
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....vided in section 12AA(3) of the Act of which detail has been discussed above in paragraph 19 of this order. If we apply the said condition stipulated in section 12AA(3), we find that there is no finding of the Commissioner of Income-tax that activities of the assessee, Agra Development Authority are non-genuine or not being carried out in accordance with the object of the assessee, Agra Development Authority. Even for the sake of argument if we accept the view of Commissioner of Income-tax there may be a case of activities which are not charitable but it cannot be said that those activities of the assessee, Agra Development Authority, are non-genuine or not being carried out in accordance with the object of the assessee. The activities and objects of the assessee, Agra Development Authority are the same which were there at the time of granting registration under section 12A of the Act and at the time when Commissioner of Income-tax cancelled the registration granted under section 12A with effect from 2009-10. Thus, we find that this condition of cancellation of registration already granted under section 12A has not been satisfied. Where the condition stipulated under section 12AA(3....